By industry
Trucking business financing: factoring, equipment, and the fuel gap
Trucking has the most developed specialist finance market of any small business sector. Here is how owner-operators and small fleets actually fund themselves.
Factoring is the industry default, for good reason
You deliver a load, you invoice the broker or shipper, you get paid in 30 to 45 days. Fuel, insurance, and maintenance do not wait. Freight factoring solves this so completely that most small carriers use it as standard operating procedure rather than as emergency finance.
- Advance rates of 90% to 97% are common in freight, higher than most industries.
- Fees typically 1% to 4% depending on volume, recourse, and customer quality.
- Many freight factors bundle fuel cards, broker credit checks, and back-office services. Those are genuinely valuable, and they also create switching costs — read the termination terms.
- Check whether it is recourse or non-recourse, and specifically what happens when a broker goes under. Broker insolvency is a real risk in freight and it is the main thing non-recourse should be covering.
Financing the truck
| New truck | Used truck | |
|---|---|---|
| Typical rate | 8% to 15% | 12% to 30% |
| Term | 4 to 6 years | 3 to 5 years |
| Down payment | 0% to 10% | 10% to 25% |
| Credit needed | 620+ | 600+, some lower with more down |
| Watch for | Warranty coverage vs. loan term | Age and mileage caps, inspection requirements |
Dealer financing is one quote. Get a second from an independent transportation equipment lender and a third from a credit union — rates in this sector vary widely and the dealer's finance arm is often not the cheapest.
The authority and insurance timeline
New authority is the hardest moment in this business to finance. Most factors want to see your MC number active, and many want 30 to 90 days of operating history. Insurance for a new authority is expensive and usually wants money up front. Budget for a genuinely lean first quarter, and line up factoring before you take your first load rather than after.
Questions people actually ask
Can I get a truck loan with bad credit?
Often yes. The truck secures the loan and there is a deep resale market, so lenders work meaningfully below 600 with a larger down payment. Expect 15% to 25% down and a rate at the top of the range.
Is freight factoring worth it?
For most small carriers, yes. A 3% factoring fee on a load is roughly 36% annualized if you run continuously — but the alternative is not a cheaper loan, it is waiting 40 days for the money while fuel goes on a card at 25%. Judge it against your real alternative.
How do I finance my first truck as a new authority?
Expect a larger down payment and a higher rate for the first year. Lenders specializing in new authority exist and price accordingly. If you have a strong personal credit score, that carries most of the weight until the business has history.